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Planning to transfer home loan? Here are 6 things to watch out for while transferring your home loan

January 12, 2020

Planning to transfer home loan? Here are 6 things to watch out for while transferring your home loan

New Delhi: With falling interest rate in the economy, some lenders like State Bank of India are offering very attractive interest rate on home loans. SBI’s home loan interest rate has fallen to as low as 7.90%. Lower interest rate by some lenders prompts existing home loan borrowers to switch their home loan from their existing lender if it does not reduce their home loan rates.

As home loans are long term loans, a small reduction in rate will lead to big savings for the borrower. Worth mentioning here is that a 50 basis points reduction in the interest rate on a Rs 30 lakh loan having 20 years of repayment period, will lead to an interest saving of around Rs 2.4 lakh for the borrower.

Here are six things borrowers need to watch out for while switching their home loan:

– While switching your home loan you should ensure that the remaining repayment period is more than five years otherwise you won’t be able to get the benefits of lower interest rates because switching home loans involves some cost like processing fee charges by the lender. It is always advised to switch your home loan as early as possible if your lender is charging a higher rate compared to other lenders.

– Don’t opt for home loans that offer a lower rate for a small period of time and increase rates after the offer period ends.

– It is important to make timely EMI payments as loan transfer may not be possible if there is an irregular repayment track record. Typically lenders ask for your loan account statement from your existing lender to check your repayment track record.

– In order to avoid future hassles, get a statement from your lender stating that the property documents will be dispatched within a certain time-frame.

– Ensure that the lender to which you are transferring your loan does not charge any forecloser penalty. These are the charges that are levied by banks for early closure of loan.

– Try to negotiate the processing fee charged by the lender. Some lenders like SBI have currently waived processing fee on home loan transfer.


Categories: Loan